Market Report

Low grades in descent

Tilburg, January 21st, 2018

It now shows clearly by the sometimes 20% lower offers for shipping rates for containers to main ports in China:  export to China is not exactly booming.   It results in increase of stocks of recovered paper merchants who still are waiting for a kick start of the purchases of the big Chinese buyers, amongst others. That might not be imminent. There are still big worries about the acceptation levels at import in China nd the necessary new licenses are not there yet either. If and when these are going to come and for which volumes remains the question. In the meantime the European market is quite filling up with low grades and, not  an insignificant phenomenon, when availability is plenty, pricing pressure comes around.  Especially those companies who traditionally focused on exports see their stocks going up rapidly. On one hand regular outlets are drying up, at least partly, on the other hand there is the uncertainty if the quality will be clean enough and where this seems indeed to be so, there are still dreams of price indications that might not be realistic anymore in today’s market situation.  The fact is that after the European paper and board industry had adjusted prices downwards, especially the reasonable buyers have experienced: how higher the price, the more is offered. Mixed paper, which is not bought by China anymore, but also occ (kls) are ample available and we are also noticing now an outlet problem in China for deink news (and pam) as many buyers and suppliers assume that the maximum contamination level of 0.5% can’t be achieved. Result: a search for overissues and a stay away from post-consumer grades. Next to that there is of course the volume problem. When the imports of recovered paper into China in 2018 will be limited to 18 million tons, another 10 million tons will have to find its way elsewhere. This is not going to work in the short term despite plans of Belgian VPK to build a new machine that should run by 2020. More than 20 of these machines and also today are needed to consume those 10 million tons. Serious price reductions are therefore ahead now that a new purchase wave from China won’t

probably arrive until after Chinese New Year. Furthermore the finished paper market in Europe seems to ‘normalize’.  In the graphic sector sales prices have been increased on a wider scale. Corrugated board not (yet) as tensions on delivery times are easing and driving up sales prices is not simple in times of decreasing raw material prices. It is quite clear that with the developments in China the finished paper market has seen a boost, whereas the recovered paper market is suffering by the same developments through reduced sales. Where will we end up ? Early 2009, when export let us down as well, e were at 1/3 of the actual price level, early 2015 it was 2/3 of it . . . .

China: imports November 2017 strongly south

The restrictions on imports of recovered paper into China became very visible in November. With a volume of 1,3 million tons, November 2017 only counted for half of the volume of November 2016.  It was also the month with the lowest import figures in a decade. Total imported volume in 2017 rose to 24.8 million tons in total, which was still much higher than the intended volumes of the Chinese authorities, but still a good 4% lower than over the first 11 months of 2016. If the allowed imported volume for 2018 can be limited to the published indicated 18 million tons, remains to be seen.

Price indication

Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 90 and € 150 per ton. These prices are depending on quality, available volume, region and loaded weight.

Click here for the price chart, with prices of the last 10 years.

The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years.  Scrolling over the top of the colums gives the exact price indication in Euro's per ton.